A vendor tells the salesperson the section 'can definitely be subdivided' and wants this in the advertising, but the salesperson has not been able to confirm it with the council. What does REA recommend?
Correct Answer
D) Leave the claim out, or say it is the vendor's unverified statement and advise buyers to check.
REA's marketing guidance says licensees should verify vendor claims, and if a claim such as subdivision potential cannot be verified, it recommends not making it. If buyers are told, it should be as the vendor's unverified statement, with advice to seek legal or expert advice. Unsubstantiated representations are an offence under ss 12A and 40 of the Fair Trading Act 1986.
Why This Is the Correct Answer
REA recommends omitting unverified claims or clearly flagging them as the vendor's unverified statement.
Why the Other Options Are Wrong
Option A: Include the claim as the vendor asked, since rule 9.1 requires following client instructions.
Rule 9.1 does not extend to acts contrary to law; unsubstantiated claims breach the Fair Trading Act.
Option B: Include it, since an honest vendor claim is enough to count as a reasonable basis for it.
A reasonable basis needs supporting evidence; REA recommends not making an unverified claim.
Option C: Include it with the word 'potential', which removes any risk of a misleading representation.
Adding a vague qualifier does not substantiate the claim; REA advises flagging it as unverified or omitting it.
Background Knowledge for Agency Practice
Source: https://www.rea.govt.nz/real-estate-professionals/industry-guidance-and-information/listing-a-property/marketing-and-advertising/
Exam Tip for Agency Practice
No evidence, no claim: unverified vendor statements must be omitted or flagged.
Common Mistakes to Avoid on Agency Practice Questions
- •Repeating a vendor's claim in advertising because the vendor asked for it.
More Agency Practice Questions
A real estate agent receives two offers on a property at the same time. What is their primary obligation?
Which of the following situations would create a conflict of interest requiring disclosure by a real estate licensee?
Sarah is a licensed salesperson working for ABC Real Estate. When showing a property to buyers, who does she primarily represent?
Under the Real Estate Agents Act 2008, what is the primary duty that a real estate agent owes to their client?
Which licence allows a person to carry out real estate agency work for an agent, but only under supervision?
- → Under section 126 of the Real Estate Agents Act 2008, what must happen after the client signs an agency agreement for the agent to be entitled to commission?
- → A licensed agent discovers that their salesperson has been providing advice about tax implications of a property investment without appropriate qualifications. What is the agent's responsibility?
- → An agency agreement contains a clause stating that the agent's commission is payable even if the property is sold by the vendor directly to a buyer introduced by the agent during the agency period, but the sale settles after the agency expires. Is this clause enforceable?
- → What must a real estate agent disclose to a potential purchaser when showing a property?
- → Under a sole agency agreement, when is the vendor still liable to pay commission to the agent?
- → Sarah holds a salesperson's licence and works for ABC Real Estate. When presenting an offer to a vendor, who is legally responsible for ensuring all disclosure obligations are met?
- → A real estate agent discovers that a property has a leaky roof after the agency agreement is signed but before any offers are received. What is the agent's obligation?
- → Which of the following allows an agent to end an agency agreement before its expiry date?
- → Under the Real Estate Agents Act 2008, what is the primary fiduciary duty that a real estate agent owes to their client?
- → What must a licensee do when they become aware of a material defect in a property they are marketing?
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